One-glance verdict
Undervalued
$18.09 our estimate vs market $15.78
Wall Street consensus: $17.00 (-6.0% lower than our fair-value estimate)
13% below our estimate, below the bear case
Fundamentals snapshot
Sally Beauty Holdings, Inc.
SBH · NYQ · Consumer Cyclical · Specialty Retail
Current price
$15.78
52-week range
$11.54 - $17.92
Market cap
$1.48B
Balance sheet
Stretched
5.09x Adequate
Net debt $1.34B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 0.7% last year.
- Reward Returns 23.5% on equity, ahead of 60% of its peers.
- Risk Stock trades 7.2% above its 5-year average P/E.
- Risk Insider ownership is only 1.4% (peer median: 2.9%).
What this company does
Sally Beauty Holdings, Inc.
Sally Beauty is a specialty store that sells professional-grade hair color, salon tools, and other beauty supplies to both the general public and licensed stylists. The company makes its money through its "Sally Beauty Supply" stores for everyday shoppers and its "Beauty Systems Group," which sells products exclusively to salons. This strategy allows Sally Beauty to earn revenue from both the do-it-yourself beauty trend and the professional salon industry.
How the company got here
Sally Beauty began in 1964 as a single store in New Orleans, Louisiana, focused on selling beauty products to professionals. It was acquired in 1969 by a consumer products company, Alberto-Culver, which helped it grow into a larger chain. A major turning point came in 2006 when Sally Beauty Holdings, Inc. separated from Alberto-Culver to become its own independent, publicly traded company. Over the years, it has expanded across the United States and into other countries by opening new stores and acquiring other beauty supply companies.
What it actually does
Sally Beauty is a specialty store and distributor that sells professional-grade beauty supplies. You can find a wide range of products for hair, nails, and skin, including hair color, shampoos, styling tools like dryers and curling irons, and nail polish. They sell products from well-known brands like Wella, L'Oreal, and Paul Mitchell, as well as their own exclusive brands that you can only find in their stores. The company serves both everyday shoppers who want to use salon-quality products at home and licensed beauty professionals who need supplies for their work.
Sally Beauty Supply
This is the part of the company that most people are familiar with; it's their retail store for the general public. These stores sell professional-quality beauty products directly to anyone who walks in, as well as to salon professionals. The shelves are stocked with items for hair color and care, nail products, and styling tools from both famous brands and Sally Beauty's own exclusive lines. This segment makes up a significant portion of the company's business and is focused on the do-it-yourself beauty enthusiast.
Beauty Systems Group
This segment, which often operates under the names CosmoProf and Armstrong McCall, serves the professionals in the beauty industry. Instead of selling to the general public, it sells products and supplies exclusively to licensed stylists and salons. This part of the business acts as a distributor, providing the professional-only brands and tools that stylists use on their clients and also sell in their salons. It's a large, professional-only network that includes stores and a dedicated sales force that calls on salons directly.
What management is betting on now
The company is focused on making its stores and website more appealing to customers and encouraging repeat business through loyalty programs and personalized offers. They are also working on growing their own exclusive brands, which tend to have a higher profit margin (the amount of profit made on each sale). Another key priority is expanding into new product areas like fragrances and strengthening their nail care selection to attract new shoppers. Management is also investing in digital tools, such as online consultations with licensed colorists and faster delivery options, to make shopping more convenient.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$73.32M
FY2025 Q1
$13.38M
FY2025 Q2
$32.17M
FY2025 Q3
$49.13M
FY2025 Q4
$78.00M
FY2026 Q1
$57.45M
FY2026 Q2
$44.12M
FY2026 Q3
$61.63M
Revenue
$935.49M
Net income
$54.08M
Diluted EPS
0.55
Operating cash flow
$80.94M
Free cash flow
$61.63M
Fetching…
Sources
Revenue
$903.38M
Net income
$42.70M
Diluted EPS
0.43
Operating cash flow
$73.28M
Free cash flow
$44.12M
Fetching…
Sources
Revenue
$943.17M
Net income
$45.56M
Diluted EPS
0.45
Operating cash flow
$93.24M
Free cash flow
$57.45M
Fetching…
Sources
Revenue
$947.08M
Net income
$49.93M
Diluted EPS
0.49
Operating cash flow
$120.88M
Free cash flow
$78.00M
Fetching…
Sources
Revenue
$933.31M
Net income
$45.72M
Diluted EPS
0.44
Operating cash flow
$69.43M
Free cash flow
$49.13M
Fetching…
Sources
Revenue
$883.15M
Net income
$39.21M
Diluted EPS
0.38
Operating cash flow
$51.06M
Free cash flow
$32.17M
Fetching…
Sources
Revenue
$937.89M
Net income
$61.01M
Diluted EPS
0.58
Operating cash flow
$33.46M
Free cash flow
$13.38M
Fetching…
Sources
Revenue
$935.03M
Net income
$48.06M
Diluted EPS
0.45
Operating cash flow
$110.67M
Free cash flow
$73.32M
Fetching…
Sources
Is it cheap or expensive?
Fair value $18.09 vs current price $15.78
Wall Street consensus is the average analyst price target: $17.00 (-6.0% lower than our fair-value estimate).
Our most-likely fair value is $18.09 a share — about 14.7% above today's price of $15.78, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $1.3B. Interest coverage 5.1x.
Net debt
$1.34B
Interest coverage
5.09x
Sally Beauty Holdings, Inc.'s profit covers its interest bill about 5.1 times over. which is stronger than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
SBH
BASELINE
Sally Beauty Holdings, Inc.
Total debt $1.52B Interest coverage 5.09x This is the baseline the peer rows are being compared against.
Total debt $2.52B Interest coverage 866.71x +16,925% vs SBH Carries about 170.3x more debt cushion than SBH.
Total debt $4.74B Interest coverage 4.08x -20% vs SBH Carries about 1.2x less debt cushion than SBH.
Total debt $3.30B Interest coverage 1.53x -70% vs SBH Carries about 3.3x less debt cushion than SBH.
Total debt $929.30M Interest coverage 3.22x -37% vs SBH Carries about 1.6x less debt cushion than SBH.
Total debt $301.43M Interest coverage 1.19x -77% vs SBH Carries about 4.3x less debt cushion than SBH.
What you should know
The case for and against SBH
3 Rewards
3 Risks
Rewards
-
Revenue grew 0.7% last year.
-
Returns 23.5% on equity, ahead of 60% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 7.2% above its 5-year average P/E.
-
Insider ownership is only 1.4% (peer median: 2.9%).
-
Operating margin compressed from 9.6% to 9.3% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
8.22x
Forward P/E
7.04x
P/B
1.70x
P/S
0.40x
EV/EBITDA
7.30x
PEG ratio
0.73x
Profitability
How much profit each dollar creates
Gross margin
52.1%
Operating margin
9.3%
Net margin
5.2%
ROE
23.5%
ROA
6.4%
Health
Liquidity and balance-sheet strength
Debt / equity
1.74x
Current ratio
2.37x
Quick ratio
0.49x
Total debt
$1.52B
Total cash
$173.10M
Growth
How the business has been compounding
Revenue TTM
$3.73B
Revenue 5Y CAGR
-1.1%
EPS TTM
1.92
EPS 5Y CAGR
4.4%
Cash flow
How much cash the business throws off
Operating CF TTM
$368.34M
Free CF TTM
$172.69M
FCF margin
4.6%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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